Beyond the Buzzword: Why your Carbon Footprint Matters

2nd July 2024

Andy Procter, Carbon Specialist and Chamber member, provides valuable insights into the sustainability landscape. He highlights the pressing need for small businesses to embark on their carbon journeys, emphasizing that sustainability is crucial for stayi

I’ve always had a keen interest in the environment. As an avid outdoorsman, I've witnessed first-hand the dramatic changes brought about by climate change, such as receding glaciers and extreme weather events. This passion for nature has carried over into my work in the electrical industry, where I've championed energy-efficient solutions and embraced new technologies. Over the years, I've observed sustainability evolve from a niche concern to a central aspect of business operations.

But is sustainability just a buzzword? A term big corporations use to polish their image? You might think that as a smaller business, it doesn’t apply to you. Well, let me tell you a secret: it does, and it will.

Background and Current Trends

In 2008, the UK government passed the Climate Change Act, committing to reduce its greenhouse gas (GHG) emissions by 80 by 2050. This commitment was strengthened in 2019 with a new target to reach net zero GHG emissions by 2050. The UK is not alone; over 140 countries, contributing more than 88 of global emissions, have pledged to achieve net zero targets.

This global commitment is substantial and will significantly impact business practices. Governments worldwide are encouraging businesses to reduce carbon emissions. For example, the UK government introduced a Public Procurement Notice (PPN06/21) in 2021 requiring all government contracts over £5 million to include a Carbon Reduction Plan (CRP) that addresses five categories of Scope 3 emissions. The NHS has further tightened this requirement, and starting April 2024, NHS suppliers with contracts over £10,000 must have a net zero commitment; going forward, these thresholds will likely continue to fall. These frameworks are rapidly becoming standard procurement practices and being adopted by the private sector.

Other mechanisms are being introduced and adopted, such as the Carbon Border Adjustment Mechanism (CBAM). This is currently a hot topic for importers to the EU, and other jurisdictions around the globe are taking note and considering similar frameworks. The UK’s equivalent is currently under consultation and is due to be introduced in 2027.

Large corporations can invest in Environmental, Social, and Governance (ESG) departments to compile the necessary data and foster a culture of sustainability. These efforts are driven not only by the need to avoid losing tenders but also by evolving reporting requirements. The EU has implemented the Corporate Sustainability Reporting Directive (CSRD), and the UK plans to adopt the International Sustainability Standards Board (ISSB) guidelines to supersede previous standards. These reporting standards ensure investors and stakeholders understand companies' environmental impacts and climate-related risks.

So, how Does It Affect Me?

Ultimately, carbon and procurement are intrinsically linked; a large proportion of a company's carbon emissions can be attributed to its Scope 3 upstream activities. To meet their CRPs and assess environmental impact, large companies will need to audit their suppliers and in turn encourage them to reduce their carbon emissions. A recent example is the large retailer Kingfisher, the group that owns brands like Screwfix and B&Q, which announced requirements for decarbonisation targets from its entire supply chain in an effort to reduce its Scope 3 emissions. Suppliers are on notice: whether you're a manufacturer, wholesaler, or contractor, your customers will eventually request your environmental credentials.

Beyond all of the current trends, the reality is that de-carbonising your business is simply the right thing to do. We have lived with disregard for our planet for too long, and it will be future generations that pay the price. It is no surprise that climate change is one of the biggest concerns for younger generations. A recent Deloitte survey highlighted that 70 of Gen Z and millennials consider an employer’s eco-credentials when job hunting.

So, how do I start?

"What gets measured, gets managed," as management guru Peter Drucker famously said. The crucial first step in your carbon journey is to assess your baseline operational carbon footprint.

This process can be time-consuming and involves extensive data collection, particularly for Scope 3 emissions, which encompass all your organization's upstream and downstream activities so the sooner you start the better. The five guiding principles for carbon accounting are relevance, completeness, consistency, transparency, and accuracy, so keeping these principles in mind developing a Carbon Footprint Report (CFR) will require effort, but it is a vital step toward producing your own reduction plan. 

Embarking on this journey not only helps the environment but also positions your business for future success in an increasingly eco-conscious marketplace. Looking at your business through the carbon lens can offer a different perspective and highlight possibilities that you may have never considered. By starting now, you'll be ahead of the curve, ready to meet the demands of customers and regulators alike.